1556

LAWS OF MARYLAND

[Ch. 311

(B)   RESTRICTIONS ON DECLARATION OR PAYMENT.
A DIVIDEND MAY NOT BE DECLARED OR PAID IF:

(1)    THE CORPORATION IS INSOLVENT OR THE
PAYMENT WOULD CAUSE THE CORPORATION TO BECOME INSOLVENT;
OR

(2)     THE CORPORATION'S STATED CAPITAL IS
IMPAIRED OR THE PAYMENT WOULD IMPAIR ITS STATED CAPITAL,

(C)      DIVIDEND FROM SOURCE OTHER THAN EARNED
SURPLUS.

IF A DIVIDEND IS PAID FROM ANY SOURCE OTHER THAN
EARNED SURPLUS, THE SOURCE OF THE DIVIDEND SHALL BE
DISCLOSED NOT LATER THAN AT THE TIME OF PAYMENT TO THE
STOCKHOLDERS MHO RECEIVE IT.

(D)   DIVIDEND ON JUNIOR CLASS.

CAPITAL SURPLUS PAID WITH RESPECT TO A CLASS OF
STOCK MAY NOT BE USED FOR THE PAYMENT OF DIVIDENDS ON ANY
CLASS OF STOCK JUNIOR TO IT.

(E)   STOCK DIVIDEND.

(1)   A SPLIT-UP OR DIVISION OF ISSUED SHARES
INTO A GREATER NUMBER OF SHARES OF THE SAME CLASS WITHOUT
ANY CHANGE IN THE AGGREGATE AMOUNT OF STATED CAPITAL IS
NOT A STOCK DIVIDEND WITHIN THE MEANING OF THIS SECTION.

(2) (I) IF A DIVIDEND IS PAYABLE IN A
CORPORATION'S OWN STOCK WITH PAR VALUE, THE SHARES SHALL
BE ISSUED AT PAR VALUE AND, AT THE TIME THE DIVIDEND IS
PAID, THE CORPORATION SHALL TRANSFER FROM SURPLUS TO
STATED CAPITAL AN AMOUNT EQUAL TO THE AGGREGATE PAR VALUE
OF THE SHARES TO BE ISSUED.

(II) THE CORPORATION MAY TRANSFER ANY
ADDITIONAL AMOUNT FROM EARNED SURPLUS TO CAPITAL SURPLUS
AS THE BOARD OF DIRECTORS DETERMINES.

(3) (I) IF A DIVIDEND IS PAYABLE IN A
CORPORATION'S OWN STOCK WITHOUT PAR VALUE, THE BOARD OF
DIRECTORS SHALL ADOPT AT THE TIME THE DIVIDEND IS
DECLARED A RESOLUTION WHICH SETS THE AMOUNT TO BE
ATTRIBUTED TO STATED CAPITAL WITH RESPECT TO THE SHARES
AND, AT THE TIME THE DIVIDEND IS PAID, THE CORPORATION
SHALL TRANSFER THE AMOUNT FROM SURPLUS TO STATED CAPITAL.

(II) THE CORPORATION MAY TRANSFER ANY
ADDITIONAL AMOUNT FROM EARNED SURPLUS TO CAPITAL SURPLUS
AS THE BOARD OF DIRECTORS DETERMINES.